Post-Covid, new forms of financial technology are beginning
to lead the future of global retail, constantly delivering cybersecurity
breakthroughs for e-commerce providers and breaking borderless payment barriers
as the traditional high street continues to decline.
In fact, in 2020 alone, the pandemic accelerated fintech
funding growth, acquiring over US$25.6bn in global investments in H1 2020. As
both retail giants and start-up competitors continue to move online, investing
in fintech is becoming vital, in order to compete with new global spending
trends.
Covid-19’s pressure on e-commerce
Covid-19’s pressure on e-commerce has opened up new
challenges for retail competitors. As traditional high street footfall fell by
89% in the height of the pandemic, the shift in consumer buying patterns put
pressure on e-commerce providers to deliver impressive digital service,
borderless payment systems, and increased cybersecurity.
As the total transaction value of online payments rose from
US$4.1trn in 2019 to a whopping $5.4trn within the space of a year, retail
competitors have turned to fintech adoption in order to access a global online
audience and create a simplified shopping experience that provides
accessibility for all forms of digital payment.
Digitalising the future of retail
Fintech is fuelling the future of digital retail. Providing
innovative solutions for small business safeguarding and positioning start-up
retailers within the global market, fintech adoption within the e-commerce
landscape is quickly rising.
In fact, a 2019 study by EY that collected data from 1000
start-up enterprises found that over 25% had adopted fintech-based systems in
order to digitalise their payment and insurance processes for faster access to
global capital.
Founder of Trolley, Tim Nixon, stated that investing in
fintechs provides small businesses with the opportunity to improve seller
experience and grow within the global marketplace. "Fintechs are helping
enable marketplaces to improve the seller experience, making it easy to get sellers
up and running and then grow their businesses — while also helping the
marketplace expand and move into new markets. This level of enablement
generally hasn't been the focus of traditional banks."
As the driving force behind online retail providers, fintech
has become a vital component in the digitalisation of global retail for a
number of reasons.
Increased fintech cybersecurity in the retail sector
While Covid-19 may have increased the number of e-commerce
competitors fighting for global success, it has also encouraged more exposure
to security threats that continue to cause data leaks across the retail sector.
Geoff Forsyth, CISO at PCI Pal claimed that the rise in
digital commerce has only increased the rise of digital fraud. In a survey by
PCI Pal, he explained that "over three-quarters of those surveyed noted
the recent uptick in cybercrime and fraud among their biggest concerns
impacting the way they purchase.”
Utilising fintech technology is breaking cyber security
barriers and making it simpler for consumers to identify themselves online.
Financial institutions are eagerly embracing fintech solutions to fight fraud
and money laundering, and thus provide securing for both merchants and their
customers. For instance, Connectum, a UK acquirer, successfully employs an
AI-based anti-fraud system that enables merchants to accept CNP payments
swiftly and securely. Utilising the machine learning tools, such anti-fraud
systems calculate transaction risk scores on the basis of the observed patterns.
They work more efficiently for the ever-evolving fraud than the manual analysis
does, or work in synergy with the latter.
The birth of borderless payments
Fintech has quickly become the driving force behind the
future of blockchain-based borderless payments. Facilitating the
decentralisation of verification and cutting out the intermediaries involved in
the global transaction process is making global retail spending fast, secure,
and cost-effective.
In addition to this, new fintech solutions such as Square
and Shopify in particular are continuing to improve the borderless shopping
experience. Working to help broaden the global reach of small businesses using
Facebook integration, Shopify is making it possible for e-commerce startups to
embed a fully functional buy button within their site for a global audience.
As blockchain payments become the newest trend amongst the
e-commerce industry, Fintech services are enabling retailers to provide
low-cost and efficient solutions for cross-border transfers. Take Wise, for
example, rather than completing traditional forms of verification, Wise
completes an image-based verification, using photo ID to verify accounts.
The future of hyper-personalisation and simplified
payments
The modern-day consumer requires digital personalisation
within their shopping experience. As e-commerce trends continue to shift,
fintech will be used to simplify the payment process and create a one-to-one
service experience in the same way as traditional retail formats.
Ian Pollari, Co-Leader of KMPG Australia states that
financial technology will have to keep up with the hyper-personalisation
standards set by large tech players such as Netflix and Uber if they want to
truly revolutionise the e-commerce sector.
“Large tech players have done very well in the context of
applying data analytics, AI, and cognitive thinking to personalise the customer
experience and take the friction out of business processes. When companies like
Uber and Netflix can do it, consumers expect all companies should be able to.”
As Fintech systems continue to evolve and create new
opportunities for global retail, it won’t be long until the cross-border
transaction barrier is a challenge of the past, and fast, reliable, global
e-commerce is the future.
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